I watched Newsnight last night, mindful of wails from the Torygraph about the BBC's pro-EU bias. From the point of view of someone essentially well disposed to the EU but sceptical about the single currency, I found it pretty disappointing.
As usual with these matters, it's very hard to put your finger on bias, because the presenters never come out and say, "Well I think . . . .". Bias is something you have to infer from the questions that are asked, from those that aren't asked, from the tone of the interviewer (in this case Emily Maitlis), and from the attitudes and assumptions that underly the programme. It was this last which I found striking. Maitlis's questions, presumably scripted by her and her producer, seemed to assume that David Cameron had lost something fundamental by not signing up to a really important treaty which has a good chance of saving the Euro.
But a 6th Form economics student could tell you that the Treaty has no chance whatever of doing that. It contains fiscal rules which will not be obeyed, attempts to impose austerity measures which will make even less likely that countries will be able to grow their way out of trouble (and which there are now some signs that electorates of individual countries won't accept), makes no provision for transfers between rich and poor regions of the EU and does nothing to make the ECB a lender of last resort.
The failure to grasp this context coloured Maitlis's questions, both to the solitary Tory MP and the European politicians on the programme. She didn't ask the Eurocrats any questions about utility of the treaty, and when they accused Britain of acting selfishly she didn't point out that Britain is not in the Euro, or that in any event the Germans are effectively holding the whole continent to ransom by refusing to allow the ECB to print money. Now there's self-interest for you. Where was the question to the Dutch MEP about the transfer of Holland's surpluses to the struggling south? The EU apparently always makes good, gradualist decisions, whereas Maitlis's questions to the hapless Tory were tinged with what sounded like real anger at Cameron's impulsive mistake.
As a BBC lover I found it made uncomfortable viewing. You don't need to be a genius to see that, whatever Cameron may have got wrong, the Eurozone leaders are in a different class of incompetence altogether.
In the Autumn the EU tried to impose a haircut on Greek bond investors. "No", cried economics geeks (including me): "If you do that to Greece, that'll just push bond yields up for bigger countries like Italy". And thus it came to pass. So what does the Group of 26 promise now? That in future there will be no more haircuts for bond investors. The words "stable door" and "horse" spring to mind. But the idea that the gilt markets will believe a promise, enshrined in an EU treaty or not, that there is no chance of them losing any of their money in a future default, is laughable.
We are dealing with a group of people, mostly unelected, incapable of understanding that if you impose losses on the bond markets it might make them wary of investing in other insolvent countries, but, that having come comprehensively to pass, capable of believing that a promise that it'll never happen again will make bond investors come running back waving their hands in the air like guests at a Happy Clappy wedding.
What does any of this have to do with Alex Salmond? Well, for a long time the SNP's policy was to join the Eurozone. That's a policy which has looked more and more difficult to justify as the imbalances thrown up by the one-size fits all interest policy have brought first Ireland, then Greece and now Italy and Spain into the maelstrom. And so it comes as no surprise to find Salmond saying, on the Today programme this morning, that post-independence the SNP will "keep the pound" until conditions are right for Euro membership. "Keep the pound"? That's big of him.
I have always thought the currency issue might be the Nats' achilles heel, and strains in the Eurozone have now brought the problem to the surface. If the Scots become independent, that means independence from the Bank of England. No doubt some accommodation could be reached about ownership of the actual notes and coins in circulation. But the Bank of England sets interest rates for all the UK. Post independence it will not be setting rates for Scotland. Or rather, it will not be taking into account the Scots economy when it sets rates. I'd be willing to bet that won't happen because some English Tory MPs will make sure it doesn't. If Scotland uses the pound for any length of time (and there will be a strong feeling in England that it shouldn't), it will be on England's terms. And that will mean interest rates suitable for England and the rest of the UK, not Scotland. In practical terms that probably means a rate that is too high for Scotland, and which will quickly strangle the Scottish economy.
Salmond had better hope that the Euro is still surviving in workable form when independence day dawns. Because Scotland could fairly quickly be setting up its own currency. How about the Groat?
PS - A couple of headlines, one on Radio 5 and one on Radio 4, two days apart, both pretty much identical - "David Cameron has vetoed a treaty to stabilise the Euro" was the gist - and both thoroughly misleading. Cameron has not prevented a treaty taking place. He has used his veto to prevent Britain having to sign it. The treaty is set to be signed next March by 26 other countries. Secondly the treaty has as much chance of stabilising the Euro as I have of conducting the Berlin Phil. Hours before the time of the second headline - last night - Italian 10 year bonds had reached record levels. Some stabilisation.
